Post navigation

Financial Advisors Valuable For Many

OCEAN CITY — Todd and David have been a couple for 20 years. They hold approximately $50 million in assets, the bulk of which is in real estate Todd inherited from his family. With retirement approaching, Todd and David decide to attend a domestic partner seminar presented by a Merrill Lynch financial advisor to make sure their finances are in order.

The financial advisor raises several points during the seminar alerting the couple to issues related to their partnership that could significantly impact David’s financial well-being in retirement. The couple realizes that, because David is not legally considered Todd’s spouse, they cannot retitle Todd’s property to include both names without potentially incurring a significant gift tax. Further, if Todd passes away first, the size of his estate would be drastically reduced by estate taxes.

These taxes, due in cash, nine months after Todd’s death, could dramatically impact the value of the assets David will ultimately receive. Without the proper plan in place, the estate might be forced to sell the real estate, including the couple’s shared home, to raise the necessary funds. Also, David’s resulting inheritance might not be enough to sustain his original standard of living. The couple schedules a meeting with the financial advisor to seek a solution.

The financial advisor suggests a strategy that includes Todd selling the mineral rights of his land to a trust to fund a life insurance trust with David as the beneficiary. This will create a steady income stream for David in the event of Todd’s death while reducing the taxable estate and therefore the possible impact of estate taxes.

The financial advisor also recommends that Todd transfer some of his holdings into a charitable trust, reducing David’s potential estate tax obligation and creating additional income for the couple, while fulfilling their philanthropic goals.

Todd and David are pleased with their financial advisor’s skill and knowledge in addressing the unique challenges facing domestic partners.

"Our advisor recommended appropriate to address financial issues we weren’t even aware of," says David. "We really felt like she understood us and was on our side throughout the entire process."

(A Merrill Lynch Wealth Management Advisor. She can be reached at 410-213-8520.)